Trading the Thanksgiving week

Trading the Thanksgiving week

Equity 4 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank Group

Summary:  Being long in Equities has historically been a good idea according to Stock Trader Almanac. It could be a good idea this year too


According to the Stock Trader Almanac being long going in to the Thanksgiving day – this year Thanksgiving is 25th November –  has historically proved to be a good strategy. Being long from Tuesday/Wednesday before selling Friday after has been a good strategy 2 out of 3 years since 1987.

So how would it be this year? S&P 500/US500 is in an uptrend and could very well prove to be a good Thanksgiving market this year topping out around 4.755 in trading days 4-5 day i.e. Friday or Monday testing the upper rising trend line (dark blue).
Currently there is divergence on RSI (highest close was 18th November) and but the MACD line has crossed over the Signal line meaning the short term uptrend is weakening.  Volume on the underlying stocks is trending up however, offering some support to the bullish Thanksgiving case.
Short term support at around 4.628. A close below could lead to a sell-off down to 4.551-4.500. 

Source: Saxo Group

Nasdaq 100/USNAS100 has performed a stronger short term uptrend than the broader market. It has almost reached its medium term upper rising trend line (dark blue line).
Divergence on RSI i.e. RSI peaks are not confirming the new high in the Index. On the other hand volume has been rising during the past week of trading support the uptrend. All in all a mixed picture but the message is the same as for S&P 500, the uptrend is weaking short term.
Support at around 15.946.

 

Source: Saxo Group

DAX/GER40 seems to be testing the lower trend line in the rising channel the leading German Index seems to be trading in. It has formed a Doji Evening like pattern end of last week indicating we could se a correction.
There is no divergence on RSI indicating that if we see further selling pressure (than what we saw Friday) we could see a break of the trendline and a possible test of the support at 15.984. If, however, DAX manage to stay above the support the short term trend will be intact possibly leading to new highs 

 

Source: Saxo Group

RSI Divergence explained: When an indicator such as RSI is displaying lower peaks while the underlying price is still making new highs. It is a sign of imbalance in the market, the strength of the trend is weakening. It could be an indicating of an ending of a trend. However, imbalances in financial markets can go on for quite some time. To cancel Divergence out RSI must either 1. Make a new high simultaneously with the price or 2. Close below 40 threshold. 

Same can be observed in bear market, just here market makes a new low but Indicator doesn’t.

 

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Support Centre
For existing clients, please click here to request support via the Support Centre.

Have a question about our products, platforms or services? Visit the Support Centre to find answers for our most frequently asked questions. If you are still unable to locate an answer to your question, you will also find contact details for your local Saxo office to speak with a representative.

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.